From Paper Maker to PlaceMaker
The Evolution of a Company
A Blueprint for Northwest Florida
The Strength of Florida
No Ordinary JOE

Dear Fellow Shareholders:

For each of the past ten years, I have begun my annual letter to shareholders with a story about my children. My daughter recently turned 16 and just got her driver’s license. My son is now 13 and just discovered girls. I’m not sure which is scarier.

More than once, I have alluded to the parallels between nurturing a child and a company. Never is that comparison more apt than when the time comes to step back and encourage
your child (or company) to fulfill their destiny on their own.

And now after eleven years, the time has come for me to step back and encourage the very talented JOE team, led by current president – soon to be CEO – Britt Greene, to continue moving JOE forward in its mission to create value for shareholders.
Britt has been integral member of the JOE team for ten years. He has advanced on merit and earned the respect of JOE’s employees, board and strategic partners. He will be a strong and capable CEO.

Though I am stepping back from day-to-day responsibilities, I will continue to serve as Chairman of the Board, helping to develop corporate business strategy, providing guidance grounded in my 37-plus years experience in the real estate industry, and helping
JOE build new relationships and strategic partnerships that can accelerate our ability to deliver value to shareholders.

I consider it a credit to the JOE board and management team that we can make this transition so seamlessly, and that the person who will serve as CEO is already a part of our senior management team.

Britt takes the helm supported by an incredibly talented, experienced management team. In the past eleven years, this team has helped to create a strong foundation for future
value through creative entitlements and regional infrastructure planning strategies. JOE’s team knows more than anyone about planning and executing complex large-scale developments in Florida. In fact, I believe the JOE team has established itself as a
platform of proven professionals that could also create value for others, beyond JOE’s legacy land holdings.

This transition comes at a time when real estate markets across the country – and especially in Florida – are as weak as they have ever been at any time in my career, which spans nearly four decades. However, it is important to remember that often the
foundation to create real value is set during the down side of the business cycle.

It is important to focus on this point: Now is the time to be opportunistic in the real estate business -- the greater the weakness, the greater the opportunity. JOE’s talent and
balance sheet is well positioned to leverage current conditions into future value.

JOE’s long-term strengths remain – extraordinary low-basis land, a strong pipeline of entitlements, an outstanding Florida location and demographics that work in our favor. Florida has been one of the fastest growing states in the nation for decades. The state’s
population is still projected to increase by an amount equal to the entire population of New Jersey from 2000 to 2025. Florida is expected to remain one of the fastest growing states in the country on an absolute basis.

The condition of the current real estate market is well-reported. Rather than be repetitive, I want to focus on the JOE platform created over eleven years that now stands ready to capture the upside and take advantage of current opportunities.

From Paper Maker to PlaceMaker

When I arrived eleven years ago, JOE was an aging industrial conglomerate with a collection of assets acquired in a different time and for a different business purpose. Over the years, my predecessors had acquired more than a million acres of Florida real estate in order to grow timber for the company’s paper mill.

For those who assembled JOE’s assets in those early years, real estate development was never a consideration. According to one legend, decades ago JOE’s senior management considered the company’s white-sand beaches to be worthless since pine trees did not grow well on them.

Times have changed.

In the late 1990s, JOE quickly began the transition from aging industrial conglomerate to one of Florida’s most innovative real estate development companies and one of the nation’s most acclaimed placemakers.

Since then, JOE’s record of accomplishment is impressive, including:

- Land planning and analysis – In early 1997, JOE did not have a clear picture of its land holdings. Since then, we have completed a painstaking analysis of our land, assigning each acre a prospective highest and best use. This planning system has evolved into a strategic tool designed to maximize shareholder value. It is a guide and tool for daily decision-making.

- A shift in perceptions of Northwest Florida – Back then, this region was known as the “Redneck Riviera.” Today, Northwest Florida is recognized as a hotbed for inspired
community design and architecture, as well as innovative commercial development. The region is emerging as a new national and international destination.

In the past, the only master planned development along the beach on Walton County Road 30-A was Seaside, one of America’s first communities to use new urbanism
principles. But today a drive along this beach road takes you past examples of planning, design and architecture from some of the nation’s most accomplished practitioners including WaterColor and WaterSound Beach. At Panama City Beach’s Pier Park, initially developed by JOE, more than one million square feet of themed retail space is anchored on the beach by Jimmy Buffet’s Margaritaville. Pier Park has quickly become a destination for thousands of beach-lovers and local residents.

- Creation of extraordinary places – Eleven years ago, JOE had no experience in or reputation for placemaking. Today, JOE is recognized as one of the nation’s preeminent placemakers. WaterColor, WaterSound Beach, WindMark Beach and RiverCamps are truly extraordinary places. They stand as evidence of the breadth and depth of the talent of our management team and the strength of JOE’s vision.

Each time we invest in one of these extraordinary places, we create value on JOE’s surrounding landholdings. This value ripple effect is a key component of our strategy
and an opportunity to grow additional value.

- Vastly improved regional infrastructure – For decades, Northwest Florida received less than its fair share of state and federal infrastructure dollars. JOE has tirelessly
advocated for regional infrastructure planning and investment. More importantly, JOE has worked with the state to provide critical rights-of-way to meet the transportation needs of tomorrow.

Over this past decade, over $1 billion in new infrastructure investment has come to
Northwest Florida.

- Permanent protection of special places – From the start, JOE made the commitment to protect forever Northwest Florida’s most special places. Today, JOE has moved
more than 170,000 acres to conservation. Most recently, the relocation of the Panama City – Bay County International Airport triggered the creation of the 41,000-acre
West Bay Preservation area, conservation land that will permanently protect nearly the entire shoreline of West Bay, Florida’s largest remaining undeveloped bay front.

- A strong entitlements pipeline – When JOE began its real estate era, JOE had a handful of entitlements, mostly in the wrong places. Today, JOE has an incredibly strong entitlements pipeline – nearly 46,000 residential units and over 14 million square feet of commercial space in hand or in process. The entitlements we have in hand are particularly valuable because the process will only get more expensive and more difficult in the future.

- The first international airport in fifteen years – Nearly ten years ago, the Panama City – Bay County Airport Authority asked JOE to help with its efforts to improve its constrained aviation facilities. Over time, this request led to an effort to relocate the airport and ultimately approval by the Federal Aviation Administration. We knew it would take time and it would not be easy – but we also knew that improving air
service is critical to the economic health of the region. JOE agreed to donate 4,000 acres for the airport site and another 10,000 acres for mitigation. At the end of a decade long process, the new airport is now under construction.

Ultimately, our work over the past eleven years has created a strong foundation for the future. Our accomplishments have put the building blocks in place to create significant
long-term value for our shareholders and for the communities where we do business.

Most importantly, we have approached our work thoughtfully, ensuring that we always protect our most valuable asset – the tremendous quality of life in Northwest Florida.

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While I am proud of what JOE has accomplished over the past eleven years, I also know that every company that aspires to building long-term value must continually reinvent
itself as business conditions and markets change. Eighteen months ago, before this current downturn, we had begun to think about the structure, expertise and skills that JOE
would need in the decade ahead.

During our first decade, only JOE was willing or able to accomplish what had to be done. Before we could engage top quality strategic partners, we needed to prove ourselves – and the Northwest Florida market. That’s just what we did with projects like
WaterColor. After more than a decade of hard work, JOE has won the respect of homebuilders, resort developers and commercial/industrial developers.

As a result, we saw that in the decade ahead JOE had the opportunity to accelerate value creation by transitioning from an end-to-end developer to becoming a regional steward
and the primary supplier of entitled land to best-in-class strategic partners and customers. As real estate markets turned down, we accelerated this transition.

In 2007, JOE’s evolution continued. JOE announced a strategic restructuring to streamline its organizational structure to focus more efficiently on regional planning, business-to-business commercial relationships, strategic alliances and demand-inducing economic development efforts. Going forward, we believe the restructured JOE will enable us to accelerate the transition of our land to higher and better uses.

As part of this restructuring, JOE has worked to significantly reduce capital expenditures, meaningfully decrease selling, general and administrative expenses and harvest value
from non-core assets. And earlier this year, in what the Wall Street Journal called a Houdini-like move, we used a public offering to eliminate our debt. JOE is now virtually debt free.

We also are limiting our capital investments by shifting more development to a range of best-of-class strategic business partners that include branded builders, project developers,
venture partners, alliances and key long-term customers. JOE capital spending for horizontal development will be limited to our most strategic and valuable places. By better managing our fixed overhead costs, we will be able to preserve the low basis in
our land, which is fundamental to our ability to use price as a competitive advantage, to put time back on our side and to create significant value over the long-term.

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A Blueprint for Northwest Florida

Broadly speaking, the health of all real estate markets and local economies comes down to the tension between supply and demand.

For more than a decade, JOE focused strongly on building its entitlements pipeline. In the decade ahead, JOE will have to continue to monitor supply, but also work to stimulate
demand with a range of inducers and accelerators.

We believe we should be focusing now on doing the things that will allow us to move Northwest Florida to the next level once our markets return to health. We are executing a
smart investment strategy that builds on Northwest Florida’s strengths and positions us squarely in the path of global economic growth. We are building on our obvious strengths while investing in strategic assets that can drive economic growth.

We will continue to build on our most obvious strength: The 125-mile stretch of beautiful white-sand beaches that draw millions of visitors each year. We’ve only begun to tap its potential to draw visitors. There is plenty of opportunity to grow the market, extend the tourism season and expand our reach.

To do so, the business community in Northwest Florida is investing in a strong regional branding campaign to raise awareness of its beaches as a national and international destination. Recently, Coastal Vision 3000, a new regional business organization,
launched an effort to break down barriers and encourage regional cooperation in creating a true destination brand and a marketing program to support it.

In the months ahead, Coastal Vision 3000 will be rolling out a new regional brand to benefit the entire region. It is a simple brand promise. Northwest Florida has some of the best beaches in the world.

Over the past eleven years, JOE has created a platform to support this brand promise in WaterColor, WaterSound Beach and WindMark Beach. This is a platform on which JOE can build significantly more value in the years ahead.

This destination brand campaign is also part of a strategy for improved air service to the entire region. Panama City – Bay County Airport Authority chairman Joe Tannehill has
convincingly argued that the new airport creates a platform to compete for new service.

In anticipation of the new airport, USAir begins new service to Panama City in April. Northwest Florida businesses should make it abundantly clear to the other airlines that are watching very closely, that we are going to make their investments in our region pay off.

Next, we believe we should focus on attracting new jobs and expanding the industrial base in areas where we are already strong: aviation, defense and security.

With Joint Strike Fighter pilot training set to begin at Eglin Air Force Base and new avionics maintenance and other critical missions underway at Tyndall Air Force Base, we
have a critical mass of trained, highly skilled aviation and aerospace workers in this region. With the new international airport, this region will have a range of commercial/industrial sites nearby, including sites with direct runway access. That’s an
incredible competitive advantage.

Just two years ago, Port Panama City had never unloaded a single container from a ship. Today, Port Panama City unloads 50,000 containers per year. With world trade growing at three times the rate of the world’s economy, we have the opportunity to grow a
strategic trade channel. That means potential for job growth in international trade and logistics, a sector of the economy that will likely grow for decades to come.

Northwest Florida is truly the best part of Florida. In the years ahead, we can achieve a healthy growing economy that offers opportunity to young people while protecting the quality of life that makes the region special. But we will not fulfill our potential by
accident. It takes work, sometimes under very difficult circumstances.

We know that JOE’s health, well-being and profitability are tied directly to the health, well-being and quality of life in Northwest Florida. Together, we can prosper economically while protecting the things that are truly special about the region.

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The Strength of Florida

Over the course of the past year, we’ve been asked several times, “Is Florida over?” As a company that is very familiar with the history of this state, we find the question amusing. Our answer: No, most definitely, Florida is not over.

Any student of Florida history knows that the state’s economy has demonstrated incredible resilience and worked through downturns before. Florida has been one of the country’s ten fastest growing states for each of the past seven decades (most decades it
was in the top four). Florida’s strong, diversified economy regularly outperformed the national economy.

According to Enterprise Florida, the state’s economic development agency:

- Florida has one of the nation’s strongest tourism industries; it’s fourth in the nation in high-tech jobs; the third largest exporter of high-tech goods and services; and is
ranked as one of the best states in the nation to be an entrepreneur.

- Florida has a robust base of technology-driven businesses, and has a significant and growing presence in the “new economy” sectors of information technology, life
sciences, homeland security, national defense and financial services.

- Florida is the strategic and financial center of the Americas. Geographic location,
combined with economic and political stability, has put Florida at the center of trade
and commerce throughout the hemisphere.

In Northwest Florida, the economy has generally performed better than the state and the nation. Walton County has one of the lowest unemployment rates in Florida and the nation.

In addition to its strong economy and projected population growth, Florida is expected to attract record numbers of Baby Boomers who are reaching the prime age for buying second or vacation homes. Florida remains a favorite Baby Boomer destination.
Demographic experts continue to estimate that the state will be one of the nation’s fastest growing populations over the next two decades. Every one of these new residents will be looking for compelling places to live, work and play. And JOE will be there to deliver.

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No Ordinary JOE

Early in my tenure as CEO, we coined the phrase, “No Ordinary JOE.” Over time, it became a mantra, primarily because it so succinctly captured the essence of this company. Today, eleven years later, we remain No Ordinary JOE.

JOE maintains significant competitive advantages: extraordinary low-basis land, a superb Florida location, the benefits that flow from Baby Boomer demographics and an incredibly talented management team. But most important, JOE remains committed to creating long-term value for shareholders and the communities where we do business.

While JOE must continue to transition as the world we live in is transformed, our consistent focus is on creating value today – and for decades to come.

It is both a privilege and a great responsibility to be the steward of so much land in a
single region. I’m proud of what we have accomplished, and I have great faith that the
JOE team will continue in the tradition we have established.

What an eleven years it has been. I wouldn’t trade this time for anything. I know my work at JOE is not done, and I look forward to a new role in building an extraordinary future.

As the responsibility for day-to-day management passes to Britt and his talented team, I look forward to contributing by focusing on the future and the challenges and opportunities just over the horizon.

Sincerely,

Peter S. Rummell

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